Why Drugmakers’ Battle in Texas is Such a Big Deal

Chaos for drugmakers

The decision by a judge in Texas to overturn F.D.A. approval for the abortion pill mifepristone could have consequences far beyond the fraught area of reproductive health, throwing the regulatory regime for medicines into disarray and potentially upending the business of drug making. The ruling to reverse a green light given more than 20 years ago has sparked a furious response from pharmaceutical executives, and the Biden administration is pushing for the decision to be blocked.

More than 400 pharmaceutical and biotech industry leaders slammed the ruling. “Judicial activism will not stop here,” they warned in an open letter on Monday, after Matthew Kacsmaryk, a federal court judge, sided with anti-abortion groups who challenged the F.D.A. approval of mifepristone over “safety concerns.” Medical organizations such as the American Medical Association and the American College of Obstetricians and Gynecologists say the drug is safe, and the pharmaceutical executives called for “the decision to disregard science” to be reversed.

The Justice Department said Mr. Kacsmaryk’s findings were incorrect and that he had engaged in an “extraordinary and unprecedented” effort to usurp the F.D.A.’s authority.

Retrospectively overturning F.D.A. decisions that are based on years of testing could also destabilize the industry. Dr. Jeremy Levin, C.E.O. of Ovid Therapeutics and the former chairman of BIO, a biotech trade association, told The Times that the ruling opened the door to “a political determination of what a medicine is and isn’t.” The precedent could be “deeply harmful for vaccines, Alzheimer’s drugs, all the others,” he added.

A separate case in Washington State produced a contradictory result. Eighteen state attorneys general challenged new F.D.A. restrictions on who can prescribe and distribute mifepristone. But a judge barred the F.D.A. from changing rules that would limit availability of the drug in the states.

The fight could end up in the Supreme Court. Although the court has since shown a willingness to limit administrative power and restrict abortion access, many legal scholars doubt the justices will view the Texas case as an opportunity to advance those goals because the potential consequences are unclear and question the quality of the case.

Massachusetts and California, meanwhile, are stockpiling supplies of abortion pills. Gov. Maura Healy of Massachusetts announced yesterday that UMass Amherst had ordered enough mifepristone to provide coverage for a year and Gov. Gavin Newsom of California said the state was buying large supplies of misoprostol, a drug that is typically used off-label in medication abortions.


Warner Bros. Discovery unveils a new streaming service. Expected to be called Max, the app will combine HBO series like “Succession” with Discovery’s library of reality series for about $16 per month. The promise of a streaming service that could compete with Disney and Netflix was one selling point of the merger between WarnerMedia and Discovery last April.

Expelled Tennessee lawmaker is sworn back in. Justin Jones, one of two Black Democrats banned from the state’s House of Representatives last week after leading a protest on gun safety, won back his seat following a unanimous vote in his home district of Nashville. His swift return is a big rebuke to the Republican-led House that voted to expel him. Justin Pearson, the other banished Democrat, could be reinstated as soon as this week.

Elon Musk faces new lawsuits. Twitter’s ex-C.E.O., Parag Agrawal, and other former executives are suing Musk’s social media company for failing to cover their more than $1 million in personal legal expenses related to shareholder lawsuits and government investigations. At the same time, Tesla is facing a class-action complaint related to videos and images of customers that had been recorded by their cars’ cameras and were subsequently shared among the company’s employees.

Swiss lawmakers expect heated debate over the Credit Suisse-UBS deal. The Swiss Parliament is back in session on Tuesday, and top of the agenda will be the $120 billion in taxpayer money used to underpin the emergency acquisition of Credit Suisse by its national rival. Lawmakers are largely powerless to alter the deal, but they may address the country’s too-big-to-fail designations for banks and seek legal action against Credit Suisse management.

Markets are focused on inflation

Investors are bracing for a one-two punch on inflation in the coming days, starting with Wednesday’s Consumer Price Index data and Thursday’s Producer’s Price Index. The two reports will be the biggest readings on inflation ahead of the Fed’s next interest rates decision on May 3.

A hot C.P.I. report could force the central bank to raise interest rates. The futures market this morning was pricing in the Fed raising rates by 0.25 percentage points next month as it battles stubbornly high inflation. The odds of an increase have grown since Friday, when the jobs report showed the labor market, while cooling, is still adding to payrolls at a healthy clip, stoking fears of rising prices.

Economists see headline inflation falling slightly. That’s mainly because of energy prices easing year-on-year. But core inflation is expected to edge up to 5.6 percent. The big culprit is rents, according to Michael Gapen, Bank of America’s chief U.S. economist, which he expects to stay elevated into the second half of 2023.

Investors got a mixed picture on inflation yesterday. The New York Fed released survey data showing that consumers see prices rising over intervals of one year and three years. But the same survey found that consumers are experiencing the onset of a credit crunch, a point many inflation-watchers seized upon. “We believe that the tightening supply of credit for households should reduce consumer spending and hence price pressures in the future,” Aichi Amemiya and Jacob Meyer, economists at Nomura, wrote in an investor note.

Stocks have been rising on the hopes that the Fed is nearing the end of its rate-boosting cycle. Michael Hartnett, a BofA equities strategist, thinks that is misguided. Investors, he said, are “too optimistic on rate cuts and not pessimistic enough on recession.”

Elsewhere in markets:

European stocks and U.S. futures were gaining as of 7 a.m. Eastern.

Warren Buffett said he plans to add to his holdings of Japanese stocks, which consist of the country’s five biggest trading firms.

Shares of Alibaba gained nearly 1.6 percent in Hong Kong after the company unveiled Tongyi Qianwen, its Chat GPT rival.

Bitcoin boom

Bitcoin is still the market’s runaway success story of the year. The king of cryptocurrencies on Tuesday topped $30,000 for the first time since June.

Bitcoin has gained 81 percent this year, far outperforming other risky assets. In contrast, the Nasdaq 100, which is made up of the world’s biggest tech stocks, has gained roughly 20 percent in that period — good enough to enter bull market territory, but a far cry from Bitcoin’s resurgence.

The latest rally appears to be partly tied to the Fed’s interest rate policy. Crypto investors are feeling bullish that the Fed will pause its interest rate increases in the near term (even though Fed officials have been suggesting the opposite), thus setting off a big rebound. Crypto asset prices sunk a year ago as the central bank began to aggressively raise rates.

Bitcoin’s biggest gains coincide with the turmoil in the banking sector. The cryptocurrency is up more than 45 percent since the collapse of Silicon Valley Bank last month. Industry advocates point to the recent rally as a sign that investors are converting some of their cash assets into digital currencies.

Elsewhere in the crypto market:

According to Bloomberg, the Winklevoss twins made a $100 million loan to their struggling crypto exchange, Gemini, as the two informally sought funding from outside investors.

Companies hunt for better data on carbon emissions

One of the biggest questions in the boardroom this year is when the S.E.C. will announce new disclosure requirements — and whether large companies will be forced to reveal the carbon emissions generated by their supply chain and customers under a mandate known as Scope 3.

Even as executives push back against such requirements, they’re preparing for them. The latest sign: Watershed, a tech start-up backed by some of Silicon Valley’s big name venture investors, including Michael Moritz of Sequoia Capital and John Doerr of Kleiner Perkins, is acquiring VitalMetrics, a carbon emissions database that could be used to determine such disclosures.

Climate change is becoming an accounting issue, Taylor Francis, a co-founder of Watershed, told DealBook, as climate disclosures move from corporate social responsibility reports to 10-K filings. “Nowhere is that more true than on Scope 3, where there’s about to be a lot of regulator scrutiny on how you do the math,” he said. European regulators, for example, recently cracked down on fashion companies’ use of the “Higg Index,” a ratings system that has been criticized for strongly favoring synthetic materials made from fossil fuels over natural ones.

Momentum is building for companies to reveal more information. European Union authorities are gearing up to enforce a slew of new rules on sustainability reporting, including mandated Scope 3 disclosures. Those changes will affect 10,000 companies outside the bloc, about a third of which are in the U.S., according to The Wall Street Journal. The U.K. has proposed its own rules, as have California lawmakers. Francis says that makes it more important for companies to find ways to produce accurate data.



Activist investors had their busiest quarter on record thanks to depressed share prices. (FT)

Newmont raised its bid for rival Newcrest Mining to $19.5 billion, pushing for a deal that would create the world’s biggest gold miner. (Reuters)

Europe’s biggest SPAC, Pegasus Europe, announced that it did not find a company to acquire, and will return capital to investors. (FT)


Senator Elizabeth Warren and Representative Alexandria Ocasio-Cortez sent a letter to Silicon Valley Bank’s biggest depositors, asking them to explicitly detail their ties to the failed bank. (Bloomberg)

The U.S. designated Evan Gershkovich, The Wall Street Journal reporter held in Russia, as “wrongfully detained,” a status equivalent to that of a political hostage. (NYT)

Jes Staley, the banker being sued by his former employer, JPMorgan Chase, for his ties to Jeffrey Epstein, lost his legal bid to break out the bank’s claims from a larger suit against him. (FT)

“Republicans are talking about raising Gen Z’s retirement age. It polls terribly.” (Semafor)

Best of the rest

Big U.S. banks are expected to disclose that customers withdrew billions of dollars at the start of the year. (FT)

Online safety advocates are turning to a new force to hold tech companies more accountable: moms. (WSJ)

“At FTX, Multimillion-Dollar Expenses Were Approved by Emoji.” (WSJ)

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